Monday, 28 March 2011

Goose Hooked, Not Cooked

I couldn't resist putting the Goose Island head on the AB eagle though!

I know there's a lot of consternation out there, in beer land, about the announcement that Goose Island has been bought by ABInBev but I spoke with brewmaster Greg Hall this morning (Chicago time) and, whilst I can't tell you all here as I've written a piece for the Morning Advertiser on the deal, I can make clear a couple of things that I hope will put some of your minds at ease.

First, Greg Hall is stepping down but is going on to look at different challenges outside beer, which he's going to chat to me in about a month or so BUT he insists that the brands, range, production methods, barrel-ageing programme and new product development will remain untouched and will flourish in the care of former Deschutes head brewer Brett Porter.

The AB suits will not be swarming into Chicago, and nor will they be handling any marketing, new product development or anything else of that ilk - there will be one line of reporting and that's John Hall, founder of Goose Island, who will report directly to the AB president in St Louis David Peacock - that's the only place where the two businesses will 'touch' on a day-to-day business. Goose Island will remain in Chicago.

Also the much-needed $1.3m that's being invested immediately will be great for all of us who love these beers and lament their lack of availability at times! If you've ever been to the Fulton Street Brewery in Chicago you'll know just how at capacity they are, they brew round the clock seven days a week for goodness sake! And that's just to keep up with demand now!

Finally, and most importantly, AB didn't get to be this big by being stupid - they know that by purchasing a multi award-winning craft brewer and giving it the capital to expand will give it more kudos and allow it to tap into more consumers that its own 'faux-craft' beer ever could.

And let's not forget we've already seen exactly the same move in the UK with Molson Coors and Sharp's...

Yes, we all have to watch this space, yes I'm a bit nervous too - especially given the Belgian arm of the business's awesome capability to bugger up craft brands - but we shall just have to trust that the Hall family didn't bust their asses to build this business only to see it dismantled.

And, also this move creates more jobs in Chicago, which if you've ever been to this lovely, but troubled, city you'll know is sorely needed.

14 comments:

You can't really trust anything you hear, though. First, all those involved in the transaction will of course speak good of it.

A-B is smart, for sure. Smart enough to milk as much cash out of Goose Island as they can before the temptation becomes too great for them to meddle. There will be expansions that will bear the Goose Island name, but will be wholly controlled by A-B.

Well, firstly Brett has great pedigree and has probably been brewing a good chunk of the beer for the past year, especially as Greg was out of the business for about three months November-January after a knee operation, so I'm sure he's no slouch when it comes to these things.

Secondly, I don't think AB is buying this for five years time, I think they're buying it for 10-20 years time, when the next generation of beer drinkers starts discovering beer and it will have sufficient distribution to allow them to discover a brand they own.

They can't halt the slide of Budweiser in my opinion, they can jump on the craft bandwagon through acquisition and, if they are smart and leave them alone, they will make huge profits from it.

Five years ago, when Goose Island entered its partnership with AB and the Craft Brewers Alliance, we heard the same dire predictions. Since then, Goose introduced a number of inspired new products and continued to win awards with their old standbys.

It's absolutely fair to take a wait and see attitude, however. As long as John Hall and much of the current team are around, there's reason for confidence. That said, John could opt to retire and all bets are off.

Respected brands like their India Pale Ale and Honker's Ale have already had production moved off site. One wonders whether expansion on Fulton Street will be primarily for increased production of 312 - their most "accessible" brand. After all, 312 is the downtown Chicago area code and therefore implies a Chicago provenance.

Reading the collective gnashing of teeth on Twitter today, seems like most beer fans are going to be holding their breath to see which way this pans out. I know a lot of us tend to see our fluted tastings glasses as half empty - but some caution is understandable.

But I think it could (and should) be a good thing. AB-InBev have been falling over themselves today to say the right things - much as Molson Coors did over here in the UK recently. If it gives GI a chance to enlarge their capacity and ship more of their rarer beers around, then I'm all for it. Goose Island IPA will not become Blue Moon.

I wonder who will jump next? Which other macro will purchase a craft label to jump on that bandwagon?

@Richard: Andy Crouch on his beerscribe site makes a good point about the greying of the craft sector, and what comes after. We saw Anchor go to Griffin, and I believe John Hall is in his late 60's, so I imagine succession will be on the GI radar regardless of owner.

I suppose if a large number of widely distributed craft businesses ended up in the hands of Big Brewing and there was some kind of subsequent 'brand fallout'... Or, if (could?) enough geeks decide to boycott brands carrying AB-I, Big Brewing or CBA investment..? As before, I guess we wait and see.

I can go and pick up a bottle of Goose Island at lunch time in Leeds - drink it in at least three bars i can think of - and i defy anyone reading this not to be able to simply open up another webpage and buy a bottle in an instant.

Other than the big supermarket brands, they are some of the easiest US beers to come by. Though I appreciate this might be something to do with Vertical Drinks being based close by for Leeds based readers.

I agree Goose Island is quite widely accessible in a couple of major cities & web-based beer suppliers but, and here's the big one, that's because there has been a rock-solid supply deal in place for some time.

I've asked the question whether or not the idea is to bring all production back under one roof, let's see what the answer is to that.

As an MBA in finance in strategy... If I were ABInBev, this is what I'd do. I'd leave them alone for a year. After the honeymoon I'd let in the cost accountants, so corporate can just "understand" what goes into each beer. All the while, I'd be building production and marketing like crazy around 312, Honkers, IPA, and Matilda.

I'd assume that the growing number of national and international buyers of craft beer are not the same as craft beer snobs. They can't really keep track of multiple styles from the same brewer--they're somewhere in between serious craft brew drinkers and mainstream beer drinkers. So, the national and international markets just need Matilda as their Belgian option from Goose Island; not Sofie, Demolition, Pere Jaques, or all the other fabulous, inventive, creative beers that Greg Hall has been delivering and that Brett Porter is undoubtedly capable of crafting. (You see this already even in Chicago at fancier restaurants--they sell the hell out of Matilda, just Matilda.)

As those other, creative, interesting beers are not going to be widely marketed outside of specialty beer and wine shops (which is probably a good business decision), their profitability, relative to Matilda, 312, Honkers will steadily decrease. The ABInBev cost accountants will have a very detailed look at what each specialty brew costs by then, relative to each other and market share. Before too long, it will become a bad business decision to release 3 or 4 vintage specialty ales each year. Corporate will cut it down to one or two, just to maintain some specialty reputation. A few years later, they can decide whether they need any specialty brew other than Matilda, after all, and whether vintage is a good investment in production. In the end, it's not even about whether each beer can make a profit. It's about which beer makes the MOST profit.

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